Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income Additional Information a. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($900,000 / 100,000 units) Required: Prepare an income statement for the company under variable costing. Sales Less: Variable expenses Variable cost of goods sold Variable selling and administrative expenses Contribution margin Less: Fixed expenses TREZ Company Income Statement (Variable Costing) $ 3,600,000 2,000,000 1,600,000 540,000 $ 1,060,000 Fixed overhead Fixed selling and administrative costs incomo $ 3 per unit $ 11 per unit $ 2 per unit $ 9 per unit

Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $45 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income Additional Information a. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $1.75 per unit in variable selling and administrative expenses. b. The company's product cost of $25 per unit consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($900,000 / 100,000 units) Required: Prepare an income statement for the company under variable costing. Sales Less: Variable expenses Variable cost of goods sold Variable selling and administrative expenses Contribution margin Less: Fixed expenses TREZ Company Income Statement (Variable Costing) $ 3,600,000 2,000,000 1,600,000 540,000 $ 1,060,000 Fixed overhead Fixed selling and administrative costs incomo $ 3 per unit $ 11 per unit $ 2 per unit $ 9 per unit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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